Commodities

Glencore’s coal fudge risks satisfying no one

15 Feb 2023

The dirty fuel is booming, and made up half of the $80 bln commodity giant’s 2022 EBITDA. Green investors may want CEO Gary Nagle to phase it out faster, while financially motivated ones would favour more mining. He’s doing neither, and paying the price with a middling valuation.

Chevron’s CEO short-termism has benefits

13 Feb 2023

The $330 billion oil giant may extend head Mike Wirth’s contract beyond guardrails. He’s focused on fossil fuels, suggesting Chevron doesn’t plan to pivot. But deals are on the horizon, including maybe with a European firm. His discipline could make him the last one standing.

Gold miner unearths risky M&A seam

6 Feb 2023

U.S.-based Newmont is offering $17 bln for Australia’s Newcrest. On paper, a deal would stack up. But Canadian rival Barrick, which Newcrest spurned in 2019, might jump back into the fray. It has the makings of a value-destructive bidding war.

East-West battleground will shift to metals

23 Dec 2022

After clashing with gas producer Russia, Europe has scrambled to diversify energy supplies to prop up its industries. Western companies will soon feel uneasy relying on China for lithium and nickel, key to a $5.3 trln green push. Expect a pile-up of mining and recycling deals.

Rio Tinto plays chancy round of Mongolian roulette

7 Dec 2022

After years of wrangling, the fate of a $3 bln offer for the rest of the Oyu Tolgoi copper mine’s partner heads to a vote. A win would make a key piece of growth easier to manage. If the bid fails, minority shareholders face stake dilution and Rio managers may merit the boot.

Saboteurs add new twist to U.S. outage problem

5 Dec 2022

Over 40,000 customers were plunged into blackouts out after attacks on two U.S. substations. Vandalism on the power grid is costly to secure against, but utilities continue to face much larger vulnerabilities. The threat from storms is orders of magnitude larger and growing.

Venezuelan oil offers little to U.S. or Chevron

28 Nov 2022

The Biden administration eased sanctions, allowing the $355 bln fossil fuel giant to access reserves. But decrepit fields mean exports could be under 1% of U.S. demand, and the dirty fuel has limited appeal. Plus Chevron is printing money and doesn’t need Venezuelan oil.

Capital Calls: ABB, Italian budget

21 Nov 2022

Concise views on global finance: The $57 bln Swiss engineering group is selling a minority stake in its car charging unit, as a fallback to volatile IPO markets; premier Giorgia Meloni’s hard-right government targets a budget deficit of 4.5% of GDP in 2023.

Capital Calls: Ticketmaster and Taylor Swift

18 Nov 2022

Concise views on global finance: A meltdown involving the pop star’s upcoming “Eras” concert tour is attracting an audience on Capitol Hill and risks an unwanted corporate fight with the artist herself.

Recession-shy investors can turn to capital cycle

10 Nov 2022

As the world braces for an economic downturn, commodities have taken a hit. But oil and mining giants have been cutting investment for almost a decade, says Edward Chancellor. Supply shortages could allow these companies to buck the market downturn.

Philip Morris and Rio’s poker faces need some work

7 Nov 2022

The $139 bln Marlboro maker and $95 bln miner have upped buyout offers to try and clinch strategically key deals. In both cases, hedge funds and minority investors called their bluff. The lesson is that bidders can’t play hardball if everybody knows they really need a deal.

Exxon and Apple are in a similar boat

28 Oct 2022

Exxon’s quarterly profit was its largest ever, at $20 bln, and nearly as high as Apple's. But the oil giant, once the world's most valuable firm, is worth a fifth of Apple. Newfound respect for earnings, and the recognition that beliefs are fleeting, could partly close the gap.

The urgent search for the perfect inflation hedge

20 Oct 2022

Nearly every major asset class has lost money this year, leaving investors scrambling to protect their wealth from rising prices. Traditional alternatives such as gold and property also have drawbacks, writes Edward Chancellor. The best shield may be the most obvious one.

Capital Calls: Coal’s fear-then-greed trade

19 Oct 2022

Concise views on global finance: Shares of Aussie coal miners fell on production disruptions from floods, only to quickly rise as investors bet on tighter supplies and higher prices.

Abu Dhabi would be a logical owner for Gunvor

4 Oct 2022

ADNOC, the emirate’s huge oil company, is interested in the privately held commodities trader. Gunvor’s valuation involves guesswork, and it used to be owned by a target of U.S. sanctions. But the UAE could use the group’s roster of gas client relationships, and it has the cash.

Gold will keep losing its irrational luster

27 Sep 2022

A pandemic, war and high inflation should be pushing the yellow metal’s price higher. Instead, at about $1,635 an ounce, it’s worth less than it was a decade ago. Miners also are extracting it at a faster rate than population growth. Farmland, for one, has become a better hedge.

Disney’s big ESPN choice, Rio Tinto Mongolia drama

15 Sep 2022

Activist Dan Loeb backed away from his demand that the $203 bln media firm sell its sports network. In this Viewsroom podcast, Breakingviews columnists debate whether it’s the right move. And the $94 bln mining giant’s attempt to secure copper supply may need heavier machinery.

America exports natural gas, imports high price

9 Sep 2022

The commodity’s prices have historically been tied to local dynamics. But the U.S. fracking business has made America a huge exporter. Domestic costs are now at a more-than-a-decade high. With capacity constrained and demand for U.S. gas rising elsewhere, prices will remain high.

Stingy investors make for dry M&A oil patch

8 Sep 2022

Even though fossil fuel companies are the best performers in the S&P 500 Index, deals have dropped more than 10% this year. That’s partly because oil and gas companies are better suited to deals when cost-cutting is a priority. But it’s also because funding has become expensive.

Paris and Berlin’s windfall tax timidity is futile

19 Aug 2022

France and Germany oppose a raid on firms profiting from the energy crisis. Berlin could borrow more, and President Macron has pledged not to hike taxes. Yet given it won’t make investors see either country as way more business-friendly, the reluctance makes little sense.